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DA: Statement by James Lorimer, Democratic Alliance Shadow Minister of Mineral Resources, on mining legislation (28/05/2012)

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DA: Statement by James Lorimer, Democratic Alliance Shadow Minister of Mineral Resources, on mining legislation (28/05/2012)

28th May 2012

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Amendments to the Mineral and Petroleum Resources Development Act (MPRDA) were due to be tabled in late 2011. It is now May and we have yet to see the amendments.

It is no coincidence that the ANC’s policy conference will be held next month. This raises suspicion that the government’s legislative framework for the minerals sector will be increasingly subject to policy proposals contained in the ANC’s research document, which calls for increased state intervention in the sector.

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One such far-reaching intervention would be the imposition of a mineral resource rents tax (or ‘super-tax’ of up to 50% on ‘excessive’ profits), which could prove devastating to job creation in the mining sector.

In mining especially, the divide between party and state must remain clear.

News that the National Union of Mineworkers (NUM) supports many of the research document’s policy proposals indicates that the party is likely to adopt these at its June conference. But critical amendments to the MPRDA should not be allowed to be hi-jacked by internal politics, especially where the draft National Development Plan (NDP) warns against increased state intervention.

The Democratic Alliance (DA) reiterates its call for amendments to the MPRDA to be tabled before the ANC policy conference. This way, it can be debated in an open Parliament rather than behind the closed doors of ANC and COSATU-affiliated unions’ policy conferences.

The mining sector currently supports just under half a million direct jobs, but has been contracting at a rapid rate, in part due to policy uncertainty and fears that critical amendments to the MPRDA .

Mining is a long-term business with high upfront capital costs. It is also susceptible to commodity price and exchange rate volatility. It can do without the threat of increased state intervention and a super-tax as these constitute disincentives to investment. Profits in the mining industry are less attractive over the long run than the ruling party appear to believe. And long-term profitability is the only foundation on which jobs can be created and sustained.

Government must take the bold step of tabling its legislative amendments ahead of the ruling party’s conference. This will go some way to preventing industry stagnation and reduce the risk of job losses.

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